Search

Social insurance reform sparks a new round of workers’ protests in China

The recently revised housing fund withdrawal regulation has caused a new spate of labour strikes and protests in China’s manufacturing hub, as the new revision limits workers’ ability to cash in the money in their accounts.

Workers on strike at Stella Footwear factory in Dongguan City, China, March 2015

The new amendment, which took effect on 1 March, narrows the conditions where workers can cash in their accounts and forbids workers from withdrawing their housing fund paid after 1 March citing ‘resignation’ or ‘unemployment’ reasons, which were frequently used by workers to withdraw their funds.

Migrant workers are not big fan of saving money in their house funds. For the majority of them it is a far-fetched dream to use the money inside to buy a flat even after decades of savings. They would rather take the money out for real cash. Guangzhou Daily reported that before the new revisions came into force, Dongguang used to have a housing fund withdrawal ‘rush’ at the end of every year, with the majority taken by migrant workers from other cities and provinces.

Workers’ indignation got intensified in factories that failed to pay their full social insurance premiums before 1 March. Due to their employers’ negligence, they will not be able to cash in the money in their housing funds even if the factories agree to pay back the premiums.

On 20 March, around 500 workers from GBM factory, a subsidiary of the Taiwanese Pou Chen group, marched in the factory compound demanding the factory to repay workers’ housing fund and ensure workers can withdraw the fund when they quit.

On 17 March, several thousands of workers (another news edition says only 200) at Yue Yuen factory, which makes shoes for Nike and Adidas, launched a work-to-rule asking the factory to terminate contracts and repay housing fund.

Earlier, 8,000 workers (another story edition says only 200) at Stella Footwear, which supplies for Prada and LV, staged strike on 9 March protesting the factory’s failure of not paying their housing funds. After several days’ struggle, the factory finally compromised and pledged to pay back workers’ housing funds, and guaranteed if workers cannot cash in their accounts due to the new regulation, the factory will be responsible of compensating workers with the same amount of money.

Zhang Zhiru, a labour rights activist and director at Shenzhen Chunfeng Labour Dispute Center, pointed out these labour actions not only challenges the new amendment in Dongguan, but also questions the efficacy of the high-profile Guangdong collective agreement regulation which took force in January.

“Workers not just quickly responded to policy changes, but also showed a general indifference to official laws and regulations,” Zhang said. “The authorities should hear workers’ opinions when they revise policies.”

Housing fund as a part of China’s social insurance system requires both workers and employers to contribute a certain percentage of salary (usually 5-20%) to workers’ individual account on a monthly basis to help workers accumulate wealth to buy property or pay rents. Workers can choose to withdraw the fund in special circumstances such as critical illness or retirement.

The minimum wage in Dongguang is currently 1,310yuan (it will go up to 1,510 in May), which means the minimum housing fund a worker can have in his account per month is 131yuan. For a worker who has worked in a factory for ten years and the factory fails to pay his housing fund, he will not be able to access his housing fund immediately, which stores the equivalent of his over ten-month’s salary and is a fairly big amount for migrant workers.

According to the new regulation, workers can access their housing fund accounts if he or she: